Boost for etailers like Flipkart, Amazon as Drugs Act to be tweaked to allow online sales

HYDERABAD: The government may consider changes to the Drugs and Cosmetics Act to permit online sale of medicines following representations made by organised retail chains such as Apollo Pharmacy, Medplus and Hetero. This follows a crackdown by drug regulators against the sale of medicines a few weeks ago through websites.

The issue is being examined by a sub-committee appointed by the Drugs Controller General of India (DCGI) and headed by Maharashtra Food and Drug Administration (FDA) commissioner Harshadeep Kamble. It’s likely to suggest that online sales be allowed with adequate safeguards pertaining to prescriptions and pharmacy licences, said a top official aware of this. Kamble didn’t respond to queries from ET.

The Maharashtra FDA had in May filed cases against online retailers like Snapdeal for selling prescription drugs without valid prescriptions or licences.

"The committee is yet to firm up its recommendations but drug controllers of many states have submitted their proposals to the government," a member of the DCGI panel told ET. "Majority members of the sub-committee are in favour of considering the pleas of trade bodies, pharmacy chains and e-tailers to allow online sale of medicines with adequate safeguards taking into account the global practices."

The recommendations of various state drug controllers and the subcommittee, if approved by the government, could open up a large business opportunity to online players such as Snapdeal, Amazon India and Flipkart, apart from pharmacy retailers.

The domestic medicine market is growing at around 10-15% a year and is estimated at around .`90,000 crore. Allowing online sales would also help organized retail pharmacy chains that are setting up virtual account for nearly 5% of the market and are growing in double digits.

Akun Sabharwal, director of Telangana’s Drugs Control Administration, said he has recommended to the government that the Drugs and Cosmetics Act be amended to enable the online sale of medicines.

"Online pharmacy, once legal sanction is given, can be operated by anyone who will meet the standards desired by the revised Drug and Cosmetics Act,” he said. Sabharwal, a doctor turned administrator who has studied the US model of dispensing medicines online, said, "There should be an equal opportunity for all people to be part of the process if they follow the statute.”

However, brick and mortar pharmacy players fear a serious threat to their existence if online sales of medicines is permitted, said JS Shinde, president of the All India Organization of Chemists and Druggists, which represents over 7.5 lakh chemists across the country. Well-funded online retailers, both domestic and global, could easily manage to obtain licences to adhere to a tweaked Drugs and Cosmetics Act, he said, putting at risk small, neighbourhood stores.

Growing real estate costs in urban areas could lead to drug retailers having to rationalise their brick and mortar models and shift to online sales by ensuring delivery of drugs by pharmacists after verifying doctor’s prescription, Sabharwal said. This suggests that the local store could still play a role in last-mile delivery in an online transaction.

Medplus, one of the largest organised pharmacy chains with 1,300 stores across several cities and a turnover of Rs 1,800 crore, moved online recently in the wake of rising demand. “We have been witnessing double-digit growth in online sales,” said chairman Madhukar Gangadi. “While online sales will lead to rationalising the brick and mortar shops, it helps in reducing overheads and improving margins faster."

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A bench of Chief Justice Rajendra Menon and Justice V K Rao passed the order while acting on a PIL filed by Delhi-based dermatologist Zaheer Ahmed who complained that lakhs of medicines were being sold on the internet every day without much regulation, posing a huge risk to patients and doctors alike.